Tui Group has agreed to repay at least €730 million of German state aid used as a bailout during the pandemic.
Under the deal, Tui would fully repay the silent participation provided by the government’s Economic Stabilisation Fund (WSF) as well as a remaining warrant bond until the end of 2023, the company said ahead of announcing annual financial results.
In return, the travel group would receive back the option rights to Tui shares held by the WSF.
More: Tui summer carryings reached 93% of pre-pandemic levels
Tui also plans to significantly reduce credit lines provided by state development bank KfW.
The repayments will be refinanced through capital increases, it added.
Chief executive Sebastian Ebel said that Tui “is stable again and on its way back to profitable growth,” citing a strong summer business this year.
He added: “Our goal has always been clear: we want to return the state aid received during the pandemic as quickly as possible in order to reduce our net debt and interest burden.
“The way to do this has been worked out and agreed with the WSF and also a structured timetable for implementation.
“The agreement with the WSF sets out the conditions and is the basis for the relevant resolutions by Tui shareholders at the AGM in February 2023.
“I ask our shareholders to approve this way and the roadmap for implementation. Now is the right time to do so: Tui is stable again and on its way back to profitable growth.
“Summer ’22 was strong, our consistently implemented transformation is paying off more and more, which is also reflected in our figures.
“Of course, we still have a challenging road ahead of us. But our strategy, our future-proof business model, the relaunch of tourism and promising customer and travel trends make us confident about our way back to normality.”
Chief financial officer Mathias Kiep said: “If the planned measures are successfully implemented, we will be able to further significantly improve Tui’s financial situation.
“With such a possible full repayment of the WSF aid and the reduction of the KfW credit lines, we strengthen our balance sheet, we benefit from lower interest payments and we gain further financial and entrepreneurial flexibility in implementing our strategy for future profitable growth.”
More: Tui summer carryings reached 93% of pre-pandemic levels